One year, 7 networks

Pac-12 completes a media company crash course

By the time Pac-12 Commissioner Larry Scott and a dozen guests sat down for a celebratory dinner Aug. 15, the conference’s seven networks had been up and running for only a couple of hours.

Around the table at a restaurant in San Francisco’s St. Regis hotel were some of the executives who helped Scott shape the idea for the first conference-owned and operated networks: media executives Chris Bevilacqua, David Rone and Jay Adya; search firm experts Jed Hughes and Bill Simon; Pac-12 senior leaders like Deputy Commissioner Kevin Weiberg; and Rick Neuheisel, the fired UCLA coach who was one of Scott’s first calls to recruit on-air talent.

The dinner was a way for Scott to commemorate the launch of Pac-12 Networks — a national feed and six regional feeds — and thank the group for their contributions. It also gave Scott a chance to reflect on the past year.

Commissioner Larry Scott has been cautious not to make revenue projections because the model is a new one.Photo by: AP IMAGES

As everyone retold stories about the formation of the networks, Scott thought back to the morning of July 28, 2011, the day after he announced plans to create the networks.

“I remember waking up and thinking, ‘Oh, my gosh, how the heck do we do this? We’re not a media company,’” Scott said.

It is now.

A little more than a year after announcing its plans, the Pac-12 Networks launched last week with distribution on 25 cable systems up and down the West Coast and the promise that every conference football game will be available live on TV, mobile, tablet or Web.

The crisscross of seven different feeds makes for a confusing programming blueprint, one that some cable systems had trouble describing in the days before the launch.

“It’s a new animal,” Bevilacqua said. “Who’s ever done one network and six regionals, and one digital network all at once? It’s a little bit confusing. But a lot of it will clear up once you actually see it on the air.”

Essentially, the national channel will carry 350 live events over the academic year. The regional feeds will carry all of those 350 events, plus as many as 100 more events (up to 50 each from the two schools that make up the regional feed in that geographic area).

For example, Pac-12 Los Angeles will carry the 350 core events that are available on the national channel. Plus, it will carry up to 50 Southern California events and up to 50 more UCLA events.

In all, across seven networks, roughly 850 events will be broadcast and another 1,400 events, mostly Olympic sports, will be streamed on the relaunched Pac-12.com.

“When you look at the infrastructure here, all of this has been done from zero,” said Gary Stevenson, who was hired 10 months ago to be president of Pac-12 Enterprises, which encompasses the TV networks, digital and Pac-12 Properties. “We went from zero to 130 staffers, we built a building, we hired talent for 850 live events. Then you put on top of it that we are at launch going to be ready to do TV Everywhere for 850 events? That hasn’t been done before.”

Pac-12 Networks executives seemed most energized by their TV Everywhere strategy, which allows authenticated cable subscribers to watch all of the networks’ feeds on any device.

At last week’s launch, TV Everywhere was available via broadband. After a week, it was expected to be available to tablets. And after three months, it likely will be available to smartphones, Stevenson said.

“What we’ve heard from a lot of our fans, particularly students, is that while they enjoy traditional television, that’s not the only way they experience media,” Stevenson said. “At launch, consumers will be able to authenticate through their cable provider and Pac-12.com.”

It’s that TV Everywhere component, though, that has caused some grumbles among cable operators.

Some operators complained privately that the Pac-12’s TV Everywhere plan, which gives online access to all streams, takes away any incentive for in-market subscribers to buy sports tiers. If digital basic subscribers have access to their main feed on TV and all the other feeds online, they aren’t likely to buy the sports tiers that have the other feeds.

The channels also had a rocky distribution start. An initial deal with Time Warner Cable, Cox, Bright House and Comcast gave the networks a distribution boost, and another deal with cable co-op NCTC added another 20 systems.

Network officials could not give an actual distribution number at launch, but sources say it was at around 10 million homes.

Notably, the channel did not launch with the big satellite distributors, DirecTV and Dish Network. The dispute boils down to price. Sources say the Pac-12 is charging 80 cents per subscriber per month for the channel, a number that Stevenson would not confirm.

Pac-12 executives expect to have more leverage once live games start, particularly this year when they will have one of the top two football picks in seven of the 13 weeks. In basketball, the Pac-12 Networks will have one of the top two picks in 13 of the 20 weeks.

“It’s nothing we didn’t expect,” said Stevenson, who was COO at Golf Channel when it launched in 1995. “It’s normal when you’re launching a television network for a lot of the distribution conversations to come down to the last minute. Nothing about that surprises us.”

At launch, the networks had 40 advertisers. Major brands such as Dr Pepper, Sony, Cisco, UPS and MillerCoors were among the biggest spenders to jump on board.

Bill Cella, chief revenue officer for Pac-12 Enterprises, pointed to Dr Pepper as an example of how the conference can offer integrated packages. Dr Pepper will be a corporate sponsor of the conference, a heavy advertiser and sponsor of the halftime show during football broadcasts. The soft drink also will have rights to the Pac-12 shield and some digital inventory as well.

“If this part of the world is important to their commerce, we can give clients many different ways to engage with the conference and our fans,” Cella said. “So far, we’ve been happy that we’ve attracted some blue-chip brands.”

The long-term outlook for the channels is that they’ll be profit machines that return significant revenue back to the conference’s institutions. Some projections have suggested that each school will see $6 million to $10 million in new revenue in the coming years, as distribution and advertising grow.

Stevenson wouldn’t address such claims, saying, “We have a budget that’s been approved by the commissioner and the university presidents. It’s a reasonable business model.”

Scott said he has purposely avoided any revenue projections. In fact, he was invited to meet with the chancellor’s cabinet at the University of California a few weeks ago and was asked that precise question by the school’s vice chancellor of finance.

“It’s probably frustrating to the schools, but I’ve been very, very cautious not to make any financial projections,” Scott said. “The reason is that this is just different than anything a conference has attempted before. Sure, we’ve got scenarios, but we’ve got to have a clearer picture on distribution and advertising.”

One reason there’s so much optimism surrounding the Pac-12 Networks, despite the distribution battles, is that they’ve got a model that’s unique to college sports. It’s as close to a professional league as there is in the college ranks, with TV, digital and sponsorship, all under one banner.

The only other conference that’s even close is the ACC, which sold syndicated TV, sponsorship and digital rights to longtime partner Raycom Sports. Rights are fragmented among multiple rights holders in other conferences.

“We’ve got one-stop shopping, something you don’t find very often in college sports,” Cella said.

The Pac-12 also differentiates itself because all 12 schools have turned over their TV and digital rights to the league. The official athletic websites for Colorado, Stanford and Washington will be managed by Pac-12 Digital this year and the rest will come under the Pac-12’s management as their deals expire with online managers like CBSSports.com College Network and NeuLion.